MYOB How-to: Set up BAS Information for GST

In addition to the GST, a business will report other obligations such as its income tax instalment, Fringe Benefits Tax instalment, PAYG Withholdings, Wine Equalisation Tax and Luxury Car Tax.

The BAS Information window is used to set up the main reporting options for GST.


Step 1:
From the top menu select Setup and scroll down to click Company Information.





Step 2:

Click on the BAS Info button at the bottom of the window. (Note: You can also change the existing
business address or contact details from the current area).





Step 3:

There are a number of options in the Bas Information set up and these are selected using the drop-down
arrows at the end of each selection field.


In the Goods and Services Tax section, select the reporting frequency, the accounting basis (cash or accrual), the calculation
method and the GST reporting option (1, 2 or 3).




Step 4 :
Now do the same in the PAYG Instalments and PAYG Witholdings section to select the options which apply to you.

Needless to say, it is important the BAS information and reporting options are set correctly and kept up to date if you are relying on them to prepare figures for the ATO.

For more MYOB how-to's and tips, visit our Tips and Tutorial Page.

Tax Concessions for Small Business

From 1 July 2007, small businesses with turnover of less than $2 million a year will be eligible for a range of tax concessions under the Government's proposed changes to the law. Small businesses will also be able to pick and choose which tax concessions best suit their business.

It's important to find out more about the new tax concessions now if you are currently registered for GST because the proposed changes may affect the way you report and account for GST early in the 2007-08 income year.

Visit www.ato.gov.au/SBconcessions or give us a call to find out more.

Source: Activity Statement Update - Quarter 4 2006-07

Terms of endearment # 3

The ATO can send two different forms to certain taxpayers each quarter, both of which can cause confusion to those who receive them.

Business Activity Statement (BAS): The BAS is a composite form collecting figures on a variety of different taxes and rebates. This form is sent to companies, trusts, partnerships and individuals who operate a business in Australia.

The return obtains details regarding:

• Goods and Service Tax (GST)
• Pay As You Go Withholding Tax (PAYGW) - this is employee group tax
• Pay As You Go Tax (PAYG) - this is personal or company tax instalments
• Fringe Benefits Tax (FBT)
• Wine Equalisation Tax
• Luxury Car Tax
• Fuel Tax Credits

As you can see it covers a wide assortment of taxes primarily related to business activities of which an entity may have three or four at any one time.

Income Activity Statement (IAS): The IAS is sent to anyone receiving taxable income that does not have tax withdrawn through the year (either through PAYGW amounts from wages or PAYG instalments on BAS statements).

IAS statements are primarily sent to individual partners of a partnership, trust beneficiaries, sole traders who aren't registered for GST or employ anyone, self managed superannuation funds and individuals who receive income such as dividends, interest or positively-geared rental receipts.

Therefore partners of a partnership may receive a BAS in regard to the partnership if they are registered for GST or employ someone, and also each receive an IAS to obtain PAYG instalments for themselves personally.

Terms of endearment # 2

Let's see if we can unravel another one of those 'not-so-clear' terminologies that the ATO love to throw at us. These two sound the same but are vastly different.

Imputation credits: These are credits that are raised from franked dividends that a person or entity may receive.

Basically, a dividend is a distribution of profits held within a company to the shareholders (the owners of the company). If the dividend is paid from profits that have not been taxed, it will be an unfranked dividend which is simply added to the person/entity's income (much the same as interest).

If the dividend is paid from profits that have been taxed, it will be a franked dividend. Franked dividends have imputation credits attached that allow a tax credit of 30% of the dividend amount to be used. The reason for this is as the company has already paid tax on the profit at the 30% company tax rate, it would be unfair that the shareholder be slugged with tax again on the same amount. Therefore the imputation credit allows the shareholder to claw back the company tax amount in their own return.

Input tax credits: When calculating a person's Goods and Service Tax (GST) position, input tax credits are the amount of GST paid on goods and services that have been purchased by the client in relation to the business they are operating. Therefore they can claim those amounts as credits against the GST they have collected from the business income.

Sometimes a person/entity may have more input tax credits than GST collected which will generate a refund for that period.

More definitions coming soon!

Budget Highlights: Cutting Red Tape for Small Business

From 1 July 2007:

The annual turnover thresholds for registration for the GST is increasing from $50,000 to $75,000 for businesses.

This is great news for many small business who are heavily burdened with compliance obligations and mounting late fines.

From 1 July, qualifying businesses may elect to de-register for GST and save themselves the headache. Every situation is different so it is important to speak with your accountant before making this decision.

Any clients considering this should give Alan a call first to discuss it. He will be able to advise you if deregistering is the best option for you personally at this time.

Feel free to give our office a call on (02) 4390 4156 or email alan@lewistaxation.com.au.